I am standing in a deserted classroom, watching a skeleton swing from a rusty nail. The desks, 13 of them, are pushed back against the wall, and the chairs are stacked in an odd, gravity-defying heap. Through the doors at the back, which appear to have been blown apart, six huge painted faces stare down from tall black curtains. One is blind in one eye, his face scarred and burned. Another seems to have parsnips in his ears. In front of them stands a rhinoceros – a fibreglass rhinoceros, but a disturbingly real-looking one at that.

Welcome to the bizarre, bloody and surreal world of Faust, which this week has been taking shape in a dowdy 1970s building on the outskirts of Edinburgh, opposite the city's airport. Lowland Hall is better known as a venue for corporate events and car auctions; but this week it has been transformed into a set for one of the largest, most ambitious theatrical productions the international festival has ever staged. Until Saturday night, the radical Romanian Silviu Purcărete will be directing his wildly imaginative take on Goethe's Faust here – performed in Romanian (with surtitles), and featuring two stages, several real fires, lots of nudity, simulated torture, and a cast of more than a hundred.

Purcărete describes his Faust – first staged in Romania in 2007 – as "freely adapted" from Goethe's play. The action begins in a schoolroom – the production's first stage, where the audience watch from traditional raked seating. Here the teacher Faust confesses that his thirst for knowledge knows no bounds, and meets his devil-tormentor, Mephistopheles – a hermaphrodite played by Ofelia Popii, with bare breasts and a thrusting codpiece under her suit. Faust is then led from the schoolroom into the production's nightmarish second set, followed by the audience, who are corralled into two "holding pens" marked off with saw horses. Here, at a fair on the night of St Walpurgis (a central European version of Halloween), Mephistopheles woos Faust with a series of surreal, diabolical tortures. There are flying angels, simulated blindings, brimstone, copious amounts of fake blood, and actresses coupling enthusiastically with fibreglass pigs. (Among the many parts listed for Purcărete's 80-strong chorus are elves, apes, gnomes, graces, fates, damsels, grey-haired crones and mice; they are joined by a black labrador puppy – for which, delightfully, there is an understudy.)

I visit the set on Saturday afternoon. A rave is in full swing on the site next door, and carloads of fluorescent-painted revellers drive by. Inside the hall, a team of 40 technicians – some of them Romanian, some recruited locally – is busy constructing the production's two giant sets, which have been driven by truck from Romania, and arrived two days before.

With just three days to go until curtain-up, Helen Gorton – company stage manager for the international festival and (along with the production manager) charged with ensuring that every element of Faust comes together – shows me around, looking understandably anxious. "We've got a few communication issues among the crew," she says. "There's a lot of waving and pointing going on." Set designer Helmut Stürmer is standing on a wooden plinth in a straw hat and yellow high-visibility jacket, shouting animatedly at two technicians as they adjust a rack of lights. Five fibreglass pigs stand in a nearby corner, next to a pile of cardboard boxes containing Romanian DVD players. Gorton points out a tin bath mounted on a high metal frame, and tells me it will be used as a launch-pit for 4ft-high flames. "It does make city councils nervous," she admits, "but I think we should be OK."

The mythical story of Faust's pact with the devil, adapted by writers from Marlowe to Thomas Mann to John Banville, appears to be having something of a theatrical moment. The theatre company Punchdrunk led the way in 2007, when they turned a disused east London warehouse into a meticulously realised vision of Faust's descent into hell; at this year's Edinburgh fringe, at least half-a-dozen companies are tackling the legend.

But Purcărete's version is by far the most ambitious. All the text in his show is from Goethe's play, translated into "high", formal Romanian. What made Purcărete want to adapt it, I ask him when we meet the day after my visit to the set. "There are few stories in the history of humanity that cannot be avoided, in any age, at any time, any century," he says, peering at me sternly over rimless glasses. "Faust is one of them. Even today, we are all tempted. And are we not always afraid of death? Are we not all scared of the limits of knowledge? Faust is in a hurry – his basic sin is being in a hurry. He's always fighting with time. You could say this is our society today."

According to Stürmer, who speaks in a rapid-fire blend of Romanian and English ("my English is good for carpenters," he says, "but not for intellectuals"), the look of the production has been key from the start: "We devised it together. It was clear that we needed two distinct spaces. One space that made you feel you want to escape, that would remind you of your school life. And one space that would open up to become the night of Walpurgis, to create a world that is intertwined with surrealism."

Fifty-nine-year-old Purcărete is now based in Paris, but continues to work with many of Romania's national companies; he has also recently made critically acclaimed guest appearances as a director for the RSC and Glyndebourne. He is used to working on a large canvas: past productions include a 1996 touring version of Les Danaïdes for 120 actors, staged in Scotland in a space described by one writer as "large enough to park a medium- sized jet"; and Ovid's Metamorphoses, performed in the Romanian city of Sibiu in June this year, in which 28 actors swam in white underwear through a huge outdoor pool.

His fascination with large-scale productions is in part, he says, a consequence of the way theatre is organised (and subsidised) in Romania: "We benefit from a system of state theatres, which have big permanent companies." But he also simply enjoys managing a large cast. "It's extremely pleasant to have such rich matter, so many actors. It's more difficult when you don't have so many, when you have to make a big production with three actors – like in Britain, and in France."

Not everyone agrees with Purcărete. One critic wrote of Les Danaïdes that "the sheer size of the chorus sometimes gave the proceedings an unintentionally comic feel". How does he react to that kind of criticism? "I don't," he says tersely. "Everybody has their own opinion. Les Danaïdes is about 50 girls and 50 boys. Maybe this critic would prefer me to cast two actresses for 50 girls?"

Back at the Lowland Hall, Gorton tells me that accommodating Purcărete's cast is proving quite a challenge. She shows me the men's and women's dressing rooms, hastily hewn from the hall's restaurant with Ikea plywood: "It's a bit of a mishmash of stuff, but we think it will do." To the rear of the first set, meanwhile, there are two blocks of showers in portable cabins – necessary, Gorton explains, "for the cast to get the blood off".

With its chorus the size of a small army, its ambitious sets and its gory, orgiastic scenes, I ask Purcărete if his production isn't more an opera than a play. "Yes," he grins. "There is a chorus, there is music. And the tickets are more expensive than at a normal theatre production." What about the blood, the torture, the pig sex – might a genteel Edinburgh audience not find it all a bit much? He shakes his head emphatically. "No, I don't think so. Blood in theatre is so common. Everybody knows there is no blood, that it's actually tomato sauce. In the theatre, nobody really dies."

Given the Romanian text, and the production's ambitious choreography, there is an added danger that the audience might find the action hard to follow – particularly while having to stand, cattle-like, in a holding pen. Purcărete disagrees: "Audiences will come and like, or dislike, this story, and the way it is told. But it's not that esoteric, or complicated. If they don't understand it, let them come several times – every night, if they like. Then they will understand."